Chapter 10-7 - 140,000 x $1.80 C = 252,000 Accumulated...

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CHAPTER 10 TRANSLATION OF FOREIGN CURRENCY FINANCIAL STATEMENTS Answers to Problems 25. (30 minutes) (Prepare financial statements for a foreign subsidiary and then translate them into U.S. dollars) Fenwicke Company Subsidiary Income Statement LCU U.S. Dollars Rent revenue 60,000 x $1.90 A = $114,000 Interest expense (10,000) x $1.90 A = (19,000) Depreciation expense (14,000) x $1.90 A = (26,600) Repair expense (4,000 ) x $1.85*H = (7,400 ) Net income 32,000 $ 61,000 * Repairs is the only expense which is not incurred evenly throughout the year. Statement of Retained Earnings LCU U.S. Dollars Retained earnings, 1/1 - 0- -0- Net income 32,000 (above) $61,000 Dividends paid (5,000 ) x $1.80 H = (9,000 ) Retained earnings, 12/31 27,000 $52,000 Balance Sheet LCU U.S. Dollars Cash 41,000 x $1.80 C = $ 73,800 Accounts receivable 10,000 x $1.80 C = 18,000 Building
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Unformatted text preview: 140,000 x $1.80 C = 252,000 Accumulated depreciation (14,000 ) x $1.80 C = (25,200 ) Total assets 177,000 $318,600 Interest payable 10,000 x $1.80 C = $ 18,000 Note payable 100,000 x $1.80 C = 180,000 Common stock 40,000 x $2.00 H = 80,000 Retained earnings 27,000 (above) 52,000 Translation adjustment (below) (11,400 ) Total liabilities and equities177,000 $318,600 Computation of Translation Adjustment Beginning net assets-0--0-Increase in net assets: Issued common stock 40,000 x $2.00 = $ 80,000 Net income 32,000 (above) 61,000 Decrease in net assets: Dividends paid (5,000 ) x $1.80 = (9,000 ) Ending net assets 67,000 $132,000 Ending net assets at current exchange rate 67,000 x $1.80 = 120,600 Translation adjustment (negative) $ 11,400...
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This note was uploaded on 02/08/2012 for the course ACCOUNTING 559 taught by Professor Keating during the Spring '07 term at DeVry Addison.

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Chapter 10-7 - 140,000 x $1.80 C = 252,000 Accumulated...

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